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AGGLOMERATION: The clustering of several similar or related activities at the same location. Many industries have firms that tend to agglomerate, that is, locate very close to one another, leading to geographic concentration. For example, the motion picture industry is concentrated in California, the fashion industry is concentrated in New York, and the petroleum industry is concentrated in Texas. Agglomeration can be caused by accessibility to a concentrated natural resource (such as petroleum or sunny weather), but if often feeds upon itself through agglomeration economies. Firms in the same industry often have lower production cost when the located near their competitors.
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Lesson 16: Aggregate Shocks | Unit 4: Complex Shifts
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Page: 13 of 21
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Our analysis of AD-curve-induced aggregate market adjustment from one equilibrium to another is more complex when we include the self-correction mechanism from the short run to the long run. Two cases: - Aggregate demand increases.
- Aggregate demand decreases.
The complex adjustment is a two step process: - First: The AD curve shifts, which leads to a short-run equilibrium and moves the aggregate market away from the long-run equilibrium.
- Second: Wages adjust to achieve equilibrium in the labor market--eventually--which changes production costs, shifts the SRAS, and restores long-run equilibrium.
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M1 The narrow-range monetary aggregate for the U.S. economy containing the combination of currency (and coins) issued by government and held by the nonbank public and checkable deposits issued by banking institutions. M1 contains the two items that function as THE medium of exchange for the U.S. economy. M1 is one of three monetary aggregates tracked and reported by the Federal Reserve System. The other two are designated M2 and M3.
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During the American Revolution, the price of corn rose 10,000 percent, the price of wheat 14,000 percent, the price of flour 15,000 percent, and the price of beef 33,000 percent.
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"Plans are only good intentions unless they immediately degenerate into hard work." -- Peter Drucker, management consultant
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TVC
Total Variable Cost
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